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Women in line for pensions boost Women in line for pensions boost
(about 2 hours later)
Hundreds of thousands more women will have the right to claim a full state pension from 2010, the government is expected to confirm later. Hundreds of thousands more women will be able to claim a full state pension from 2010, ministers have announced.
At present, 90% of men but just 35% of women qualify for the full £87 a week. Currently 90% of men but 35% of women qualify for the full £87 a week - many gave up work to care for children so did not make sufficient NI payments.
Many women who gave up work to care for children or relatives have not paid National Insurance for the minimum 39 years. This will drop to 30 years. They had been able to "buy back" up to six years but a Pensions Bill amendment will allow people to buy another six years with a one-off payment.
Up to 555,000 people could benefit from the policy change, according to the Department for Work and Pensions. Last year a similar plan was rejected by ministers, angering campaigners.
Ministers are due to announce that the new limit will be introduced for men and women from April 2010. The changes would affect men and women who reach state pension age between 5 April 2008 and 5 April 2015 and already have 20 years on their National Insurance record.
Credits 'Fair and affordable'
In addition, those who have missed out on National Insurance payments will be able to buy an additional six years' contributions, giving many more people the chance of the full pension. It is estimated that 90% of those who will benefit will be women.
This will double the current amount people are able to buy in order to reach the minimum required for a full pension. The move follows a long cross-party campaign, led by former Labour minister Baroness Hollis, but ministers had resisted efforts arguing it was not affordable.
These moves will mean that by 2025, 95% of women reaching pension age will be entitled to a full state pension, ministers say.
BBC political correspondent David Thompson said the government had resisted such moves until now, despite a cross-party campaign led by former Labour minister Baroness Hollis.
FROM THE TODAY PROGRAMME More from Today programmeFROM THE TODAY PROGRAMME More from Today programme
But faced with mounting pressure - and the possibility of defeat when the Pensions Bill goes before the House of Lords next week - ministers have had a change of heart, he said. In 2007 the government was defeated in the House of Lords who voted through a similar amendment on the Pensions Bill.
Work and Pensions Secretary James Purnell is also expected to announce a new system of NI credits which will recognise caring for children or a disabled person in the same way as paid work. It had indicated it would support the plan but later dropped the idea, saying it would not help the poorest pensioners.
Mr Purnell told the Daily Mail: "The Pensions Act will transform pension provision and finally bring equality for women and carers, so that by 2010 around 75% of women reaching state pension age will be entitled to a full basic state pension, rising to 95% by 2025." BBC political correspondent Gary O'Donoghue said the government had been facing another defeat on the issue in the Lords next week.
Announcing the changes, Work and Pensions Secretary James Purnell said: "This is a fair, affordable and straightforward and it will give more people the chance of a secure future to look forward to in retirement."
Up to 555,000 people could benefit from the policy change, according to the Department for Work and Pensions.
Mr Purnell says the Pensions Bill means that by 2010 about 75% of women reaching state pension age would be entitled to a full basic state pension, and by 2025 that would rise to 90%.
He is also expected to announce a new system of NI credits which will recognise caring for children or a disabled person in the same way as paid work.
Dr Ros Altmann, head of the Pensions Action Group, told BBC Radio 4's Today programme: "The idea is that the cost of buying a year's worth of extra pension is much less than the value of the extra pension you will get during a normal period of retirement."Dr Ros Altmann, head of the Pensions Action Group, told BBC Radio 4's Today programme: "The idea is that the cost of buying a year's worth of extra pension is much less than the value of the extra pension you will get during a normal period of retirement."
Buying an extra year's worth of pension should cost around £400, and many women will find it a good investment, even if they have to borrow money to afford it, said Dr Altmann.Buying an extra year's worth of pension should cost around £400, and many women will find it a good investment, even if they have to borrow money to afford it, said Dr Altmann.
It seems to me there would be a lot of merit in simplifying the whole system - making it fair for everybody Ros Altmann Pensions Action Group
But she warned that women should take advice before committing money, as a sizeable proportion of those on low and middle incomes will anyway be entitled to £130 a week in state pension under the pension credit.But she warned that women should take advice before committing money, as a sizeable proportion of those on low and middle incomes will anyway be entitled to £130 a week in state pension under the pension credit.
And she added: "Obviously, some women will say 'Why do I have to buy it, why don't I just get it as an entitlement?' Some women could be fearful that if they are not well and die quickly they won't get the value." The government had already announced it was to reduce the level of NI contributions needed for a full state pension.
Dr Altmann said it would be better to reform the whole state pension system so that it is not dependent on payment of National Insurance contributions because women are being made to "jump through hoops". From 2010 men and women will need to have paid contributions for just 30 years. Currently men need 44 years of contributions while women need 39 years.
She said: "It seems to me there would be a lot of merit in simplifying the whole system, making it fair for everybody, women, carers, whoever, disabled people.
"You know, whether or not you've worked in the waged labour force perhaps isn't the only way, or whether you've cared in the right way, to accrue a decent state pension."
Will you benefit from these changes? Will you be retiring in 2010? How will the changes affect you? Send us your comments using the form below.Will you benefit from these changes? Will you be retiring in 2010? How will the changes affect you? Send us your comments using the form below.
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